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Past Is Prologue

Norman Roberts profile picture
Norman Roberts


  • Although many study financial reports and conference calls, I primarily rely on a company's past performance and its recent financial highlight summary.
  • As a cumulative preferred investor, I have prospered regardless of my failure to understand and therefore dive deeply into the numbers.
  • As a preferred investor in search of higher than average yields I have gravitated to several sectors of the economy.

I'm certain that my followers are quite familiar with the title of this article. They've seen me use it on many occasions, mostly in the comment sections of my articles. Especially when I'm responding to my naysayers who complain that I'm a lightweight who never bothers to dig down into the numbers, e.g. the financial statements and balance sheets. Regretfully, they are correct. However, it's not because I'm lazy, although I tend to be, no, it's because I really don't feel that I am qualified to interpret them sufficiently to arrive at the correct conclusion about a company's future profitability. Certainly not enough to pontificate about them to my followers. It happens to be the primary reason I began investing primarily, and then almost virtually in all cumulative preferred fixed-income securities. I do this because I found that it is considerably easier to determine the future viability of a company than to predict its profitability over the next quarter or the next few years.

And past is prologue is the way I have found to best accomplish this. Complain as some might and on occasion do, I have prospered utilizing this simple yet effective method of determining the future viability of companies that I have considered making a preferred or note investment in.

Serendipitously, when I began investing in preferreds, it was at the very bottom of the market crash. I had recently learned about them and after extensive research decided that given my lack of financial acumen, preferred investing would level the playing field and allow me to compete more successfully with what I had come to realize were more knowledgeable investors than I ever hoped to be. However, I did know about hotels, their RevPar, revenue per available room, and occupancy rates. I also reasoned why many were facing a great deal difficulty, which was directly related to the

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Norman Roberts profile picture
I suspect that most preferred income investors are conservative by nature. I am. I don't believe I have any special talent or gift for trading, a crystal ball, or any access to insider information. Consequently, I have little expectation of prospering by consistently buying low and selling high. In fact, prior to becoming a fixed income investor, my trading history boasted the opposite, buying high and selling low. Tis sad but true, over those years, I've given more to the market than I've taken from it. However, that's yesterday's news, and of no real interest. Of importance is that I'm patient, analytical, organized, pretty good at math, and always looking for that angle, strategy, or edge to help guarantee my market success. The Art & Science of Preferred Dividend Investing details my history, education and growth as a preferred investor and the lessons I learned along the way. I want to share that knowledge by introducing you to this effective, profitable, and safe way to invest in preferred equities.

Analyst’s Disclosure: I am/we are long AHT-G, ARR-B, RAS-B, RAS-C, NYMTO, MITT-B, NM-G, NM-H, SB-D, GSL-B, TNP-D, GMLPP, TOO-B, GST-A, LGCYO, GFNCP. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (37)

04 Nov. 2017
Hi Norman, Thanks for the writeup. I have been following you for sometime have a position in RAS-B since before the crash, recently acquired Nm-g tannl, AND SB-D as well. thanks. Niraj
Norman Roberts profile picture
You're welcome, Nir. Let's hope that our investments work out for both of us.
Altitudinous profile picture
Thanks, and, being a holder of RAIT's common and its A, B, and C preferreds, looking forward to Part II.
Norman Roberts profile picture
It has already been submitted, Alt.
Excogitator profile picture
Been following you for years now, and have a good proportion of my personal portfolio in preferreds because of it. I am actually "drifting" to more preferreds and less commons as my investing experience matures.
7 to 8% yield is fine with me, but I also am interested in having as much in qualified dividends as possible.
Any site etc to see which are qualified?
Norman Roberts profile picture
Quantum tell you in the box to the far right. yes, it's qualified, no it's not. That's the 15 or 20% box.
Any idea why with about two minutes to go in the trading day someone dumps a tremendous amount of stock on GST?? It happens frequently and happening today and it went from 86 down to 80 in about two minutes
Any idea why with about two minutes to go in the trading day someone dumps a tremendous amount of stock on GST?? It happens frequently and happening today and it went from 86 down to 80 in about two minutes
Any idea why with about two minutes to go in the trading day someone dumps a tremendous amount of stock on GST?? It happens frequently and happening today and it went from 86 down to 80 in about two minutes
Norman Roberts profile picture
Not a clue, It probably means nothing at all.
alex_pombo profile picture
Hi Norm, thanks for the valuable input, the -650k was a paper loss or realized loss ? trying to understand if the -650k went up with the market value in order to help you recover paper losses, or realized losses were recovered only by new investments

thanks again regards Alex
Norman Roberts profile picture
A loss, realized, when I sold the majority of my common position andnused the funds to snap up as many preferreds as I could afford. The best move I ever made, Alexx.
David.options.2021 profile picture
I know you don't like the mall sector, but CBL cuts its dividend today. I own the preferred and will be picking up some more. This is the scenario we like. Cut of common dividend to save money for other obligations (like preferred debt).
Norman Roberts profile picture
Yes, Dave, when they cut the commons I like its preferreds better, as long as they don't eliminate the common dividend completely.
DividendInvestorLA profile picture
I was wondering why the big move in CBL's preferreds. Now I know thanks to you. :) Bought a tiny sliver too.
David.options.2021 profile picture
Even though cuts in common dividend is good news for the preferred, 'investors' panic and dump the preferred also. Bad mistake for them. Price always recovers nicely and you get a few days to buy at bargain prices.
BeatingTheJoneses profile picture
Interesting to see your rationale and style. Any long-term investor will tell you that you need to find your style and what works for you. Even Buffett differentiated from Graham. Personally I don’t understand preferreds because I’ve never spent the time to try to but the Past is Prologue is similar to my style of Bet on the Jockey approach. This requires past performance to determine future performance. Why do I invest this way? Same reason as you to an extent. I don’t get down and dirty in the details but I find people interesting and the leadership is the greatest determining factor of performance. This approach has led me to winners like TSLA, NFLX, BABA, JPM, CRM. I’ll caution you on making sure if grading their past performance you consider leadership because they can destroy a company with GE, JCP, Sears as examples. Good luck!
Norman Roberts profile picture
Thanks, Beat. If you wnt to learn about preferreds, I suggest:

How do you think on ras preferred one?
Norman Roberts profile picture
Hoping that it holds to my cockroach theory and survives, Anz.
Norman Roberts profile picture
That has to be an error, Grid, I don't own PSA. I should have included those I watch also. Notice in the disclosures there is no PSA preferred.
Gridbird profile picture
Ok, confession time... Out of the list of preferreds you mentioned above that you own or have owned, one sticks out incredibly bad like a sore thumb... PSA...When did you ever play in that safe sandbox with a protective fence around it? That trade looks out of character for you.
Citadel West profile picture
Hi Norman,

I've been a recent convert to preferred investing and have had some success in the energy sector. However two of my energy preferred choices (NEEPRG & DYNPRA) have been called and/or underwent mandatory conversion.

What would you recommend as replacements in the energy space?
Norman Roberts profile picture
Energy is a bit risky, but a NuStar (NU) preferred or note might be a good choice.

I appreciate the honesty and the humility, but the article is too rambling. Even if you are wrong, even if you are flawed in math, it is better to have a take and present it. A little of the personal slant is enjoyable, but this is too much. Get into a discussion of Gastar for instance. Good, bad and ugly. And not just a personal record of discovery, but discussion of the entity.
Norman Roberts profile picture
That's Part II, 2179.
So The Dr. cracks open his own skull and allows us to have a brief glimpse inside. Excellent!!
Norman Roberts profile picture
Be careful, Randy, I soon might begin to charge.
Just wondering norm, how many of your preferred shares have gone bust over the years. Thanks for your guidance in this relatively unpopular area
Norman Roberts profile picture
Several in oil, two in shipping. The rest, I'm perfect with. The oil was a big surprise because of the drastic fall in the price of gas and oil. Shipping, I took a shot.
Norman I appreciate your “simple analysis” and have taken several of your suggestions from recent articles you have written. I frankly am starting to regret plunging into more risky stocks recently and think I am going to start being happy with the 7 and 8% singles and doubles rather than trying to swing for the fences each time. Everyone has to find a style they are comfortable with and I like the way you look at the world (investments not necessarily politician LOL!!). Appreciate your honesty and insights and your humor. Wishing you and your readers continued success.
Norman Roberts profile picture
Thanks, Chaim, I know you'll eventually come around to my political way of thinking too. LOL
Outstanding column Norm! I appreciate your honesty and candor in reveling your past failures and ultimate success. Please know that I enjoy your posts and looking forward to reading them even if I occasionally disagree with you. Wishing you profitable investing, Nomad
Norman Roberts profile picture
Thanks, Nomad.
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